Cost Accounting
Cost accounting is a system of collecting, recording, and analyzing financial data to help managers make a decision about resource allocation.
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Coffee Maker’s Incorporated (CMI) – Transfer Pricing Example
Two divisions of a CMI are involved in a dispute. Division A purchases Part 101, and Division B purchases Part 201 from a third division, C. Both divisions need
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What is Segment Contribution Margin
Segment Contribution Margin In the world of financial markets, segment contribution margin is used as a way to determine the margin that will be required to sel
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Difference between gross margin and contribution margin
Contribution margin vs gross margin; this is a matter of great confusion among many accounting students. Most of them think they both are the same. In this post
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What is unit cost and how to compute unit costs?
Unit Cost The unit cost (also known as unit price) of output (production) is an estimation of the total cost required to produce the output. The unit cost of th
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Relevant Costs – Meaning and Pitfalls
Relevant costs are those expected future costs that vary under various alternatives. These are the costs that are affected due to decision-making. Non-recogniti
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What are the Flaws in Traditional Costing System
A traditional costing system is an accounting approach used to assess the cost of producing products in order to generate a profit. The traditional allocation m
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Target Costing and Lifecycle Costing Explained
Target Costing and Lifecycle Costing are two important tools that can be used to manage and control costs throughout the product development process. Target cos
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Method of Absorbing Overhead to Various Products or Jobs
Overhead Absorption A method of overhead absorption in cost accounting is a method of allocating expenses and gains to cost centres within a business. Benefits
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What are the Objectives of Target Costing?
Target Costing is a strategic pricing technique used by businesses in which the desired selling price of a product is set, and then the costs associated with ma
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Differences Between Traditional Costing and Target Costing
Many companies have difficulty understanding how traditional costing and target costing differ. These terms have their own specific meanings and purposes. Tradi